Mkts take rate hike in their stride

Written by fe Bureaus | Mumbai | Updated: Jul 28 2010, 14:30pm hrs
Equity markets on Tuesday closed higher despite more-than-expected rise in the reverse repo rate. However, a rally in the European markets and higher US futures boosted sentiments.

The Reserve Bank of India (RBI) increased the repo rate by an expected 25 basis points and the reverse repo rate by 50 basis points against the market expectation of 25 basis points. Interest rates-sensitive sectors auto, real estate and banking led Tuesdays gains.

The 30-share BSE Sensex, gained 57.6 points, or 0.3%, to 18,077.61, while the50-share NSE Nifty climbed 12 points, or 0.2%, to 5,430.6.

BSE Auto index gained 2.44%, BSE realty index gained 1.47% and BSE 0.69%. The biggest gainers on the Sensex were Mahindra and Mahindra, which gained 3.2%, followed by Tata Motors, which climbed 3.16%. ACC and Hero Honda also gained close to 3% each.

European stocks, which were up for the sixth straight day, climbed to a five-week high boosted by strong corporate earnings, especially from banks.

On Tuesday, foreign institutional investors (FIIs) ended their fifteenth straight buying session. According to NSE provisional data, FIIs marginally sold equities worth Rs 23 crore, while domestic investors, who have been selling continuously for several sessions, sold stocks worth Rs 222 crore.

FIIs have purchased equities worth $2.4 billion in July, while their purchases in 2010 have crossed $9 billion.

With the kind of foreign flows and buoyant world markets we are seeing, our markets should have gained significantly but we are struggling, said Ambareesh Baliga, VP, Karvy Stock Broking. The losers on the index were Larsen & Toubro (L&T), which declined almost 3%, followed by HDFC and BHEL, which fell a little over 0.5% each.

The overall market breadth, however, was negative with only 1,369 stocks advancing and 1,520 declining.

The market breadth is not supportive as only a few select stocks are rallying, said Siddharth Bhamre, head (equity derivatives), Angel Broking.

We dont except significant breakout in the market, he added.